The product and the brand

Since the early theorisation on the brand, there has been much discussion on the relationship of brands to products. How do the concepts differ? How are they mutually interrelated? On the one hand, many a CEO repeats to his or her staff that there is no brand without a great product (or service), in order to stimulate their innovativeness and make them think of the product as a prime lever of brand competitiveness.

On the other hand, there is ample evidence that market leaders are not the best product in their market. To be the ‘best product’in a category means to compete in the premium tier, which is rarely a large segment. Certainly within the laundry detergent category, market leaders such as Tide, Ariel and Skip are those delivering the best performance for heavy-duty laundry, but in other cases it is the brand with the best quality/price ratio that is market leader.

Dell is a case in point. Are Dell’s computers the best? Surely not. But who really needs a ‘best computer’? What would be the criterion for evaluation? ‘Best’ is a relative concept, depending on the value criteria used to establish comparisons and identify the ‘best’. Infarct the market is segmented: the largest proportion of the public, and even most of theB2B segment, wants a modern, reliable, cheap computer.

Thanks to its build-to-order business model, Dell was able to innovate and become the leader of that segment. Co-branded ‘Intel inside’, it reassures buyers and surprises them by its astonishing price and one-to-one customization:each person makes his or her own computer. Is Swatch the best watch? Surely not either. But in any case this is not what is asked by Swatch buyers: they buy convenience and style, not long-lasting superior ‘performance’, whatever this may mean.

It is time to look deeper into the brand–product relationship. Looking at history, most brands are born out of a product or service innovation which outperformed its competitors. A superior product/service was the determining factor of the launch campaign. Later, as the product name evolves into a brand, customers’ reasons for purchase may still be the brand’s ‘superior performance image’, although in reality that performance has been matched by new competitors. This has been the basis of Volkswagen’s leadership and price premium: a majority of consumers keeps on believing that Volkswagen cars are the most reliable ones.

The new Golf Five, launched in September 2003, 30 years after the first Golf, is 10 per cent more expensive than its two European rivals, the Peugeot 307 and the Renault Megane. This quality reputation is crucial for Golf and for Volkswagen itself: this model used to represent 28 per cent of its sale sand almost half its operating profit. When Golf 4 sales fell by 17. 9 per cent over 12months, Volkswagen’s operating profit fell too, by 56 per cent.

As all tests and garage repair records demonstrate, Volkswagen quality has now been matched and even bypassed by Toyota, but for buyers, perception is reality. Brand assets are made of what people believe. As for rumours(Kapferer, 2004), the more people believe arumour, the more strongly their belief is held. Why would so many people be completely wrong? It took 20 years for Toyota to shake the belief among US consumers that Volkswagen cars are the most reliable: it takes time to prove one’s reliability. Often, to go faster it is best to target a new generation of drivers with an open mind.

Looking at competitive behavior, it seems that brands alternate in their focus. They capitalize on their image, then innovate to recreate or nurture the belief of product superiority(on some consumer benefit), then recapitalise on their image, and so on (Figure below). Sony’s advertising is very typical of this pendulum behavior: it alternates ads that introduce new products and pure image ads with no specific material content or superiority content. These latter ads maintain brand saliency (Ehrenberg et al, 2002).

Suppose a consumer wants to buy a new car because of the birth of his or her fourth child. This major event creates a new set of expectations, some tangible, some intangible. The consumer wishes to buy a minivan, with two sliding doors, high flexibility within the cabin, and of course a reliable, secure brand, with credentials and some status.

By looking at Internet sites, at magazines and visiting dealers, it is possible to identify those models with the requested visible attributes (size, flexibility, sliding doors). Now what about the invisible attributes, like the experiential ones(driving pleasure) or those one has to believe on faith, such as reliability? Obviously, these attributes do or do not belong to the brand’s reputational capital. They cannot be observed. This is one of the key roles of brands: to guarantee, to reassure customers about desired benefits which constitute the exclusive strength of the brand, also called its positioning.

Psychologists have also identified the halo effect as a major source of value created by the brand: the fact that knowing the name of the brand does influence consumer’s perception of the product advantages beyond what the visible cues had themselves indicated, not to speak of the invisible advantages.

Finally, attached to the brand there are pure intangible associations, which stem from the brand’s values, vision, philosophy, its typical buyer, its brand personality and soon. These associations are the source of emotional ties, beyond product satisfaction.

In fact, in the car industry, they are the locus of consumers’ desire to possess a brand. Some brands sell very good products at fair price but lack thrill or desire: they cannot command a price premium in their segment. Their dealers will have to give more rebates(which undermine brand value and business profitability).

Figure below reminds us of the double nature of brands. People buy branded products or services, but branding is a not a substitute for marketing. Both are needed. Marketing aim sat forecasting the needs of specific consumer segments, and drives the organization to tailor products and services to these needs. This is skill: some car marques offer minivans with sliding doors, some do not. However, part of the willingness to pay is based on a personal tie with the brand. Uninvolved consumers will bargain a lot.

Brand-involved consumers will bargain less. Brand image is directly linked to profitability. In fact, in the Euromonitor car brand tracking study, measuring the image of all automobile brands operating in Europe, it has been said that apositive shift of one unit on the global opinion scale means there is 1 per cent less bargaining by customers.

The product and the brand

Strategic Brand Management Related Practice Tests

Strategic Management Practice Tests
Brand Equity In Question What Is A Brand? Differentiating Between Brandassets, Strength And Value Tracking Brand Equity Goodwill: The Convergence Of Finance And Marketing How Brands Create Value For The Customer How Brands Create Value For The Company Corporate Reputation And The Corporate Brand Strategic Implications Of Branding What Does Branding Really Mean? Permanently Nurturing The Difference Brands Act As A Genetic Programme Respect The Brand ‘contract’ The product and the brand Each Brand Needs A Flagship Product Advertising Products Through The Brand Prism Brands And Other Signs Of Quality Obstacles To The Implications Of Branding Brand And Business Building Are Brands For All Companies? Building A Market Leader Without Advertising Brand Building: From Product To Values, And Vice Versa Are Leading Brands The Best Products Or The Best Value? Understanding The Value Curve Of The Target Breaking The Rule And Acting Fast Comparing Brand And Business Models: Cola Drinks From Private Labels To Store Brands Evolution Of The Distributor’s Brand Are They Brands Like The Others? Why Have Distributor's Brands? The Financial Equation Of The Distributor’s Brand The Three Stages Of The Distributor’s Brand The Case Of Decathlon Factors In The Success Of Distributor's Brands Optimising The Dob Marketing Mix The Real Brand Issue For Distributors Competing Against Distributor's Brands Facing The Low-cost Revolution Should Manufacturers Produce Goods For Dob's? Brand Diversity: The Types Of Brands Luxury, Brand And Griffe Service Brands Brand And Nature: Fresh Produce Pharmaceutical Brands The Business-to-business Brand The Internet Brand Country Brands Thinking Of Towns As Brands Universities And Business Schools Are Brands Thinking Of Celebrities As Brands The New Rules Of Brand Management The Limits Of A Certain Type Of Marketing About Brand Equity The New Brand Realities We Have Entered The B To B To C Phase Brand Or Business Model Power? Building The Brand In Reverse? The Power Of Passions Beginning With The Strong 360° Experience Beginning With The Shop The Company Must Be More Human, More Open Experimenting For More Efficiency The Enlarged Scope Of Brand Management Licensing: A Strategic Lever How Co-branding Grows The Business Brand Identity And Positioning Brand Identity: A Necessary Concept Identity And Positioning Why Brands Need Identity And Positioning The Six Facets Of Brand Identity Sources Of Identity: Brand Dna Brand Essence Launching The Brand Launching A Brand And Launching A Product Are Not The Same Defining The Brand’s Platform The Process Of Brand Positioning Determining The Flagship Product Brand Campaign Or Product Campaign? Brand Language And Territory Of Communication Choosing A Name For A Strong Brand Making Creative 360° Communications Work For The Brand Building Brand Foundations Through Opinion Leaders And Communities The Challenge Of Growth In Mature Markets Growth Through Existing Customers Line Extensions: Necessity And Limits Growth Through Innovation Disrupting Markets Through Value Innovation Managing Fragmented Markets Growth Through Cross-selling Between Brands Growth Through Internationalisation Sustaining A Brand Long Term Is There A Brand Life Cycle? Nurturing A Perceived Difference Investing In Communication No One Is Free From Price Comparisons Branding Is An Art At Retail Creating Entry Barriers Defending Against Brand Counterfeiting Brand Equity Versus Customer Equity: One Needs The Other Sustaining Proximity With Influencers Should All Brands Follow Their Customers? Reinventing The Brand: Salomon Adapting To The Market: Identity And Change Bigger Or Better Brands? From Reassurance To Stimulation Consistency Is Not Mere Repetition Brand And Products: Integration And Differentiation Specialist Brands And Generalist Brands Building The Brand Through Coherence Defining The Core Identity Of The Brand Confirming The Presence Of Brand Core Facets In Each Product Identifying The Role Of Each Product Line In The Construction Of The Brand Graphically Representing The Overall System Of The Brand Checking The Coherence Worldwide The Three Layers Of A Brand: Kernel, Codes And Promises Respecting The Brand Dna Managing Two Levels Of Branding Growth Through Brand Extensions What Is New About Brand Extensions? Brand Or Line Extensions? The Limits Of The Classical Conception Of A Brand Why Are Brand Extensions Necessary? Building The Brand Through Systematic Extensions: Nivea Extending The Brand To Internationalize It Identifying Potential Extensions The Economics Of Brand Extension What Research Tells Us About Brand Extensions Avoiding The Risk Of Dilution Balancing Identity And Adaptation To The Extension Market Segments Assessing What Should Not Change: The Brand Kernel Preparing The Brand For Remote Extensions Keys To Successful Brand Extensions Is The Market Really Attractive? An Extension-based Business Model: Virgin How Execution Kills A Good Idea: Easycar Brand Architecture The Key Questions Of Brand Architecture Type And Role Of Brands The Main Types Of Brand Architecture The Flexible Umbrella Brand The Aligning Umbrella Brand (masterbrand) Choosing The Appropriate Branding Strategy New Trends In Branding Strategies Internationalising The Architecture Of The Brand Some Classic Dysfunctions What Name For New Products? Group And Corporate Brands Corporate Brands And Product Brands Multi-brand Portfolios Inherited Complex Portfolios From Single To Multiple Brands: Michelin The Benefits Of Multiple Entries Linking The Portfolio To Segmentation Global Portfolio Strategy The Case Of Industrial Brand Portfolios Linking The Brand Portfolio To The Corporate Strategy Key Rules To Manage A Multibrand Portfolio The Growing Role Of Design In Portfolio Management Does The Corporate Organization Match The Brand Portfolio? Auditing The Portfolio Strategically A Local And Global Portfolio – Nestlé Handling Name Changes And Brand Transfers Brand Transfers Are More Than A Name Change Reasons For Brand Transfers The Challenge Of Brand Transfers When One Should Not Switch Analysing Best Practices Transferring A Service Brand How Soon After An Acquisition Should Transfer Take Place? Managing Resistance To Change Factors Of Successful Brand Transfers Brand Turnaround And Rejuvenation The Decay Of Brand Equity The Factors Of Decline Distribution Factors When The Brand Becomes Generic Preventing The Brand From Ageing Rejuvenating A Brand Growing Older But Not Ageing Managing Global Brands The Latest On Globalisation Patterns Of Brand Globalisation Why Globalise? The Benefits Of A Global Image Conditions Favouring Global Brands The Excess Of Globalisation Barriers To Globalisation Coping With Local Diversity Building The Brand In Emerging Countries Naming Problems Achieving The Delicate Local–global Balance Being Perceived As Local: The New Ideal Of Global Brands? Local Brands Can Strike Back The Process Of Brand Globalisation Globalising Communications: Processes And Problems Making Local Brands Converge Financial Valuation And Accounting For Brands Accounting For Brands: The Debate What Is Financial Brand Equity? Evaluating Brand Valuation Methods Brand Valuation In Practice The Evaluation Of Complex Cases What About The Brand Values Published Annually In The Press? Strategic Brand Management Interview Questions